Submission to the Senate Ctte. on Charity Fundraising in the 21St Century

Submission to the Senate Ctte. on Charity Fundraising in the 21st Century Background to the PFRA The Public Fundraising Regulatory Association (PFRA) is the self-regulatory body for face to face fundraising in Australia. Face to face fundraising is one of a number of methods used by charities across Australia to generate funding. It provides significant funding that allows charities to provide vital services for local communities and to help solve some of the greatest global issues. Established in February 2015, the role of the PFRA is to make sure that the right balance is maintained between the duty of charities to ask for donations and the right of the public to experience high standards of behaviour from our members’ fundraisers. The PFRA is a charity-led, membership-based association. Members include those charities that benefit from face to face fundraising and the professional fundraising suppliers that support charities in this work. A complete list of PFRA charity members is available as Annex B. The PFRA is governed by a Board of Directors elected PFRA members. The current members of the PFRA Board include senior fundraisers from Plan International, Australian Red Cross, and Peter MacCallum Cancer Foundation. The PFRA is unique in the fundraising sector in that it is the only organisation that has been established specifically to regulate one type of fundraising and ensure compliance with a Standard. In addition to setting standards for face to face fundraisers, the PFRA rigorously checks that fundraisers comply with its Standard through a quality assurance program, as well as enforcing the Standard through a penalty, sanctions and remediation regime. The PFRA has a role in the self-regulation of face to face fundraising only, and does not currently have a role in the self-regulation of other forms of fundraising such as cash collections, lotteries, raffles, commercial sales of charitable products or telephone fundraising. We are however, organisational members of the Fundraising Institute of Australia, and work closely with colleagues in many other organisations to promote higher standards in fundraising. PFRA Responses to the Senate Committee’s Questions a. whether the current framework of fundraising regulation creates unnecessary problems for charities and organisations who rely on donations from Australian supporters; The current regulatory framework for fundraising is fragmented across multiple states, each with different definitions of charitable appeals, operating conditions and varied registration and reporting requirements. Given that the majority of direct public fundraising is conducted by medium and large charities, most of which are either national or federated in structure, this presents a unique set of challenges for the country. While Australia would be considered a medium sized country in terms of population, it is regularly ranked in the top 10 globally in terms of donations as measured per capita. However, charities in Australia have to spend a disproportionate amount of time and money complying with the 8 different state and territory based regulatory systems on top of the federal requirements that come with DGR status, when compared to other countries such as the UK and New Zealand. Recent research conducted by Deloitte, on behalf of the ACNC for example, would indicate for example that the total burden for complying with these myriad regulatory systems is over $15m a year.1 It should also be noted that most state regulations do not differentiate between types of charity, meaning that small and medium sized charities are likely to be disproportionately affected by the requirements and costs. In addition, the differing timescales for charitable appeals to be submitted and approved means that the ability of charities to respond quickly to emergencies (international, national or state) can be hindered by these requirements. For instance charities may be faced with a perverse situation, when attempting to raise funds to support communities affected by bush fires, that they can more easily raise funds from states than the state actually impacted. Finally, for face-to-face fundraising there is an additional level of regulatory burden. Local councils in many states require additional permissions to use public spaces for street fundraising (approximately 80%) and in some cases also for door-to-door fundraising (around 50%). This effectively means that for an incredibly socially beneficial activity, charities are required to submit to three separate and different levels of government regulation – commonwealth, state and local. Plus, many also choose to submit to self-regulation (through the PFRA) to demonstrate their commitment to best practice and ethical fundraising. 1 Deloitte Access Economics; Australian Charities and Not-for-Profits Commission Cutting Red Tape: Options to align state, territory and Commonwealth charity regulation Final Report 23 February 2016 b. whether current fundraising laws meet the objectives that guided the decision to regulate donations; Table 1: Comparison of State Fundraising Laws’ Statutory Objects State/Territory Law Statutory Objects To promote proper management and administration of collections; Charitable To ensure proper record-keeping and auditing of accounts for collections; ACT Collections Act 2003 To ensure that the public has access to information about collections. To promote proper and efficient management and administration of fundraising appeals for charitable purposes; Charitable To ensure proper keeping and auditing of accounts in connection with such appeals; New South Wales Fundraising Act 1991 To prevent deception of members of the public who desire to support worthy causes. Northern Territory No Law N/A Collections Act Queensland No Statutory Objects 1966 Collections for South Australia Charitable No Statutory Objects Purposes Act 1939 Collections for Tasmania No Statutory Objects Charities Act 2001 Transparency and public confidence in the fundraising industry and in not-for-profit organisations that conduct fundraising; Fundraising Act The protection of members of the public from whom money or a benefit is solicited for beneficial or benevolent Victoria 1998 purposes in the course of fundraising; The protection of the public interest in relation to fundraising. Charitable Western Australia Collections Act No Statutory Objects 1946 As can be seen from the table above, only 3 of the seven states/territories with charity fundraising laws explicitly define the statutory objects of those laws. It is nonetheless relatively straightforward to infer from the laws in the remainder of states what those objects are, and they are broadly in line with ACT, NSW and VIC. Overall, the objectives of all fundraising law can be broadly placed in three groups: proper administration, clear accountability and public protection. The traditional argument for state governments to require charities to register and then seek special permission to conduct appeals may be argued is because they have preferential or special status in terms of tax concessions. However, the main tax benefit for charities (that of Deductible Gift Receipt status) is granted by a commonwealth body, the ATO and the ACNC administers much of the bureaucratic apparatus to facilitate this and other governance requirements. This potentially weakens the argument that the benefits charities derive from their status necessitates an additional regulatory process of registration, reporting and permissions. Indeed, the work ACNC has done in recent years to reduce double registrations and reporting is to be welcomed and we strongly encourage all states to participate in this process of red-tape reduction. All charities that are members of the PFRA are registered with the ACNC and as such must submit their audited accounts and annual report to that body. This would seem to raise questions as to why separate reporting regimes are required in each of the states as well, or why specific reporting on individual appeals is either required by state bodies or more importantly the citizens of those states. Charities are already accountable to their donors and beneficiaries and produce significant amounts of information on their work, spending and impact. It could well be argued that this information, which is produced feely by charities to demonstrate the impact they are having in their area of work, is far more effective and useful for the public to determine whether the charity should command their trust and confidence, and therefore deserving of their donations. The PFRA believes the regulation of charitable appeals are most properly a function of government when it seeks to reduce or mitigate two potential matters of public harm. First, and most importantly, to ensure that only legitimate charities (and their partners) are able to freely solicit donations through properly authorised appeals. The implicit counter to this objective being to prevent criminals from abusing the trust of the public and soliciting donations meant for genuine charities. The second matter of public harm is to ensure that legitimate charities are operating in line with a core set of standards or behaviours when interacting with the public. This is to provide a high degree of assurance to the public that information provided is accurate and not misleading. All laws, and fundraising should be no different, should be judged on a clear public interest test. This constitutes two parts. One being a clear definition and assessment of the

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